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First Hawaiian, Inc. Reports Second Quarter 2018 Financial Results and Declares Dividend

July 26, 2018 4:05 PM

HONOLULU, July 26, 2018 (GLOBE NEWSWIRE) -- First Hawaiian, Inc. (NASDAQ: FHB), (the “Company”) today reported financial results for its second quarter ended June 30, 2018.

“We are very pleased with our solid performance in the second quarter,” said Bob Harrison, Chairman and Chief Executive Officer. “We had strong earnings driven by good loan growth, continued margin expansion, and excellent asset quality. Our profitability metrics continued to improve and our capital ratios remained strong. Additionally, during the quarter, BNP Paribas reduced its ownership in First Hawaiian below 50% with a successful offering of 16.8 million shares in connection with which we concurrently repurchased approximately 3 million shares.”

On July 25, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share. The dividend will be payable on September 7, 2018 to stockholders of record at the close of business on August 27, 2018.

Earnings Highlights

Net income for the quarter ended June 30, 2018 was $69.1 million, or $0.50 per diluted share, compared to $68.0 million, or $0.49 per diluted share, for the quarter ended March 31, 2018, and $56.9 million, or $0.41 per diluted share, for the quarter ended June 30, 2017. Core net income1 for the quarter ended June 30, 2018 was $69.7 million, or $0.50 per diluted share, compared to $68.3 million, or $0.49 per diluted share, for the quarter ended March 31, 2018, and $57.2 million, or $0.41 per diluted share, for the quarter ended June 30, 2017.

Net interest income for the quarter ended June 30, 2018 was $141.4 million, an increase of $1.7 million compared to $139.7 million for the quarter ended March 31, 2018, and an increase of $10.1 million compared to $131.3 million for the quarter ended June 30, 2017. The increase in net interest income compared to the first quarter of 2018 was due to higher average balances and yields on loans, lower average balances of time deposits and higher yields on interest bearing deposits in other banks, partially offset by higher rates on interest bearing deposits, lower average balances and yields on investment securities, and lower average balances of interest bearing deposits in other banks. The increase in net interest income compared to the second quarter of 2017 was due to higher average balances of loans and higher yields on loans, interest-bearing deposits in other banks, and investment securities, partially offset by higher rates on deposits.

Net interest margin (“NIM”) was 3.18%, 3.13% and 3.02%, for the quarters ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively. The 5 basis point increase in NIM versus the prior quarter was due to higher overall yields on earnings assets, partially offset by higher deposit costs, an additional day in the quarter and a lower premium amortization adjustment.

Results for the quarter ended June 30, 2018 included a provision for loan and lease losses of $6.0 million compared to $6.0 million in the quarter ended March 31, 2018 and $4.4 million in the quarter ended June 30, 2017.

Noninterest income was $49.8 million in the quarter ended June 30, 2018, an increase of $1.1 million compared to noninterest income of $48.7 million in the quarter ended March 31, 2018 and a decrease of $0.8 million compared to noninterest income of $50.6 million in the quarter ended June 30, 2017. The increase in noninterest income compared to the first quarter of 2018 was primarily due to $1.4 million higher credit and debit card fees and $0.4 million higher income from bank-owned life insurance (BOLI), partially offset by $0.5 million lower trust and investment services income and $0.2 million lower service charges on deposit accounts. The decrease in noninterest income compared to the second quarter of 2017 was primarily due to $1.5 million lower service charges on deposit accounts, $1.3 million lower other income, and $0.5 million lower BOLI income, partially offset by $1.5 million higher other service charges and fees, $0.9 million higher credit and debit card fees and $0.2 million higher trust and investment services income.

Noninterest expense was $91.9 million for the quarter ended June 30, 2018, an increase of $1.3 million from $90.6 million in the quarter ended March 31, 2018, and an increase of $4.9 million from $86.9 million in the quarter ended June 30, 2017. Noninterest expense in the second quarter of 2018 included a $0.7 million expense related to a decrease in the conversion rate of the Visa Class B restricted shares we sold in 2016. The increase in noninterest expense compared to the first quarter of 2018 was primarily due to $0.7 million higher contract services and professional fees, $0.6 million higher card rewards program expenses, $0.4 million higher occupancy expenses, and $0.3 million higher regulatory assessments and fees, partially offset by $0.5 million lower salaries and employee benefits and $0.3 million lower equipment expenses. The increase in noninterest expense compared to the second quarter of 2017 was primarily due to $1.5 million higher occupancy expenses, a $1.3 million increase in salaries and benefits, $0.9 million higher other expenses, $0.6 million higher contracted services and professional fees, and $0.5 million higher card rewards program expenses.

The efficiency ratio was 48.0%, 48.1% and 47.8% for the quarters ended June 30, 2018, March 31, 2018 and June 30, 2017, respectively.

The effective tax rate was 26.0% for the first and second quarters of 2018 and 37.1% in the second quarter last year. The lower effective tax rate in the second quarter of 2018 compared to the same quarter last year was due to the lower corporate tax rate resulting from the Tax Cuts and Jobs Act.

Balance Sheet Highlights

Total assets were $20.5 billion at June 30, 2018, compared to $20.2 billion at March 31, 2018 and $20.4 billion at June 30, 2017.

The investment securities portfolio was $4.8 billion at June 30, 2018, compared to $5.1 billion at March 31, 2018 and $5.1 billion at June 30, 2017. The portfolio remains largely comprised of securities issued by U.S. government agencies.

Total loans and leases were $12.6 billion at June 30, 2018, up 1.4%, from $12.5 billion at March 31, 2018 and up 4.8% from $12.1 billion at June 30, 2017.

The growth in loans and leases in the second quarter of 2018 compared to the first quarter of 2018 was led by increases in commercial real estate loans of $99.0 million, residential real estate loans of $80.1 million, construction loans of $60.0 million and consumer loans of $36.1 million. Commercial and industrial loans (C&I) declined by $103.1 million, primarily due to declines in dealer flooring balances as dealers more carefully managed their inventory levels as well as some increased competition by the captive finance companies. Compared to June 30, 2017, the growth in loans and leases was due to increases in residential real estate loans of $314.2 million, commercial real estate loans of $292.0 million, consumer loans of $104.6 million and construction loans of $98.3 million. C&I loans declined by $214.9 million, primarily due to declines in dealer flooring balances, as dealers more carefully managed their inventory levels paydowns as well as some increased competition by the captive finance companies, and payoffs and paydowns in commercial loans and in the shared national credit portfolio.

Total deposits were $17.4 billion at June 30, 2018, virtually unchanged from $17.4 billion at March 31, 2018, and a decrease of $0.1 billion, compared to $17.5 billion at June 30, 2017.

Asset Quality

The Company's asset quality remained excellent during the second quarter of 2018. Total non-performing assets were $13.8 million, or 0.11% of total loans and leases and other real estate owned, at June 30, 2018, compared to non-performing assets of $12.1 million, or 0.10% of total loans and leases and other real estate owned, at March 31, 2018 and non­-performing assets of $8.1 million, or 0.07% of total loans and leases and other real estate owned, at June 30, 2017.

Net charge offs for the quarter ended June 30, 2018 were $4.0 million, or 0.13% of average loans and leases on an annualized basis, compared to $4.6 million, or 0.15% of average loans and leases on an annualized basis for the quarter ended March 31, 2018 and $3.4 million, or 0.11% of average loans and leases on an annualized basis for the quarter ended June 30, 2017.

The ratio of the allowance for loan and lease losses to total loans and leases was 1.11% at June 30, 2018 and March 31, 2018 and 1.13% at June 30, 2017.

Capital

During the second quarter of 2018, the Company repurchased approximately 2.968 million shares of FHI common stock from a wholly owned subsidiary of BNP Paribas at a total cost of approximately $81.8 million.

Total stockholders' equity was $2.5 billion at June 30, 2018, compared to $2.5 billion at March 31, 2018 and $2.6 billion at June 30, 2017.

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.61%, 12.19% and 13.23%, respectively, at June 30, 2018, compared with 8.71%, 12.73% and 13.77% at March 31, 2018 and 8.70%, 12.73% and 13.81% at June 30, 2017.

First Hawaiian, Inc.

First Hawaiian, Inc. (NASDAQ: FHB) is a bank holding company headquartered in Honolulu, Hawaii. Its principal subsidiary, First Hawaiian Bank, founded in 1858 under the name Bishop & Company, is Hawaii’s oldest and largest financial institution with branch locations throughout Hawaii, Guam and Saipan. The company offers a comprehensive suite of banking services to consumer and commercial customers including deposit products, loans, wealth management, insurance, trust, retirement planning, credit card and merchant processing services. Customers may also access their accounts through ATMs, online and mobile banking channels. For more information about First Hawaiian, Inc., visit the Company’s website, www.fhb.com.

Conference Call Information

First Hawaiian will host a conference call to discuss the Company’s results today at 5:00 p.m. Eastern Time, 11:00 a.m. Hawaii Time. To access the call, participants should dial (844) 452-2942 (US/Canada), or (574) 990-9846 (International) ten minutes prior to the start of the call and enter the conference ID: 3937469. A live webcast of the conference call, including a slide presentation, will be available at the following link: www.fhb.com/earnings. The archive of the webcast will be available at the same location. A telephonic replay of the conference call will be available two hours after the conclusion of the call until 8:30 p.m. (Eastern Time) on August 5, 2018. Access the replay by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID: 3937469.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may”, “might”, “should”, “could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would”, “annualized” and “outlook”, or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. For a discussion of some of the risks and important factors that could affect our future results and financial condition, see our U.S. Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our annual report on Form 10-K for the year ended December 31, 2017.

Use of Non-GAAP Financial Measures

We present net interest income, noninterest income, noninterest expense, net income, earnings per share and the related ratios described below, on an adjusted, or ‘‘core,’’ basis, each a non-GAAP financial measure. These core measures exclude from the corresponding GAAP measure the impact of certain items that we do not believe are representative of our financial results. We believe that the presentation of these non-GAAP financial measures helps identify underlying trends in our business from period to period that could otherwise be distorted by the effect of certain expenses, gains and other items included in our operating results. We believe that these core measures provide useful information about our operating results and enhance the overall understanding of our past performance and future performance. Investors should consider our performance and financial condition as reported under GAAP and all other relevant information when assessing our performance or financial condition.

Core net interest margin, core return on average total assets and core return on average total stockholders’ equity are non-GAAP financial measures. We compute our core net interest margin as the ratio of core net interest income to average earning assets. We compute our core return on average total assets as the ratio of core net income to average total assets. We compute our core return on average total stockholders’ equity as the ratio of core net income to average stockholders’ equity.

Return on average tangible stockholders’ equity, core return on average tangible stockholders’ equity, return on average tangible assets, core return on average tangible assets and tangible stockholders’ equity to tangible assets are non-GAAP financial measures. We compute our return on average tangible stockholders’ equity as the ratio of net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our core return on average tangible stockholders’ equity as the ratio of core net income to average tangible stockholders’ equity, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total stockholders’ equity. We compute our return on average tangible assets as the ratio of net income to average tangible assets, which is calculated by subtracting (and thereby effectively excluding) amounts related to the effect of goodwill from our average total assets. We compute our core return on average tangible assets as the ratio of core net income to average tangible assets. We compute our tangible stockholders’ equity to tangible assets as the ratio of tangible stockholders’ equity to tangible assets, each of which we calculate by subtracting (and thereby effectively excluding) the value of our goodwill. We believe that these measurements are useful for investors, regulators, management and others to evaluate financial performance and capital adequacy relative to other financial institutions. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results or financial condition as reported under GAAP.

Tables 13 and 14 at the end of this document provide a reconciliation of these non-GAAP financial measures with their most closely related GAAP measures.

Investor Relations Contact:
Kevin Haseyama, CFA
(808) 525-6268
[email protected]		Media Contact:
Susan Kam
(808) 525-6254
[email protected]

__________________________________
1 A non-GAAP measure. For more information on these measures, including reconciliation to the most directly comparable GAAP measure, see “Use of Non-GAAP Financial Measures” and Tables 13 and 14 at the end of this document.

Financial Highlights Table 1
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share data) 2018 2018 2017 2018 2017
Operating Results:
Net interest income $141,403 $139,672 $131,254 $281,075 $260,599
Provision for loan and lease losses 6,020 5,950 4,400 11,970 8,900
Noninterest income(1) 49,797 48,700 50,558 98,497 101,617
Noninterest expense(1) 91,865 90,587 86,929 182,452 172,920
Net income 69,053 67,958 56,895 137,011 113,635
Basic earnings per share 0.50 0.49 0.41 0.99 0.81
Diluted earnings per share 0.50 0.49 0.41 0.99 0.81
Dividends declared per share 0.24 0.24 0.22 0.48 0.44
Dividend payout ratio 48.00 % 48.98% 53.66% 48.48 % 54.32%
Supplemental Income Statement Data (non-GAAP):
Core net interest income $141,403 $139,672 $131,254 $281,075 $260,599
Core noninterest income(1) 49,797 48,700 50,558 98,497 101,617
Core noninterest expense(1) 90,951 90,180 86,472 181,131 172,079
Core net income 69,720 68,259 57,181 137,979 114,163
Core basic earnings per share 0.51 0.49 0.41 0.99 0.82
Core diluted earnings per share 0.50 0.49 0.41 0.99 0.82
Performance Ratio:
Net interest margin 3.18 % 3.13% 3.02% 3.16 % 3.01%
Core net interest margin (non-GAAP) 3.18 % 3.13% 3.02% 3.16 % 3.01%
Efficiency ratio(1) 48.04 % 48.08% 47.81% 48.06 % 47.74%
Core efficiency ratio (non-GAAP)(1) 47.56 % 47.86% 47.56% 47.71 % 47.50%
Return on average total assets 1.38 % 1.35% 1.16% 1.36 % 1.16%
Core return on average total assets (non-GAAP) 1.39 % 1.36% 1.16% 1.37 % 1.17%
Return on average tangible assets 1.45 % 1.42% 1.22% 1.43 % 1.22%
Core return on average tangible assets (non-GAAP)(2) 1.46 % 1.43% 1.23% 1.44 % 1.23%
Return on average total stockholders' equity 11.23 % 11.02% 9.03% 11.13 % 9.13%
Core return on average total stockholders' equity (non-GAAP) 11.34 % 11.07% 9.07% 11.20 % 9.18%
Return on average tangible stockholders' equity (non-GAAP) 18.83 % 18.32% 14.89% 18.57 % 15.14%
Core return on average tangible stockholders’ equity (non-GAAP)(3) 19.01 % 18.40% 14.96% 18.70 % 15.22%
Average Balances:
Average loans and leases $12,552,610 $12,296,678 $11,903,255 $12,425,351 $11,743,835
Average earning assets 17,817,943 18,088,280 17,453,655 17,952,365 17,453,094
Average assets 20,121,504 20,407,718 19,692,222 20,263,820 19,730,651
Average deposits 17,199,368 17,504,054 16,782,887 17,350,869 16,841,296
Average shareholders' equity 2,466,392 2,500,299 2,528,388 2,483,252 2,508,564
Market Value Per Share:
Closing 29.02 27.83 30.62 29.02 30.62
High 31.28 32.36 31.34 32.36 35.32
Low 27.09 26.92 26.96 26.92 26.96

As of As of As of As of
June 30, March 31, December 31, June 30,
2018 2018 2017 2017
Balance Sheet Data:
Loans and leases $12,637,686 $12,464,165 $12,277,369 $12,062,392
Total assets 20,479,719 20,242,942 20,549,461 20,373,974
Total deposits 17,395,538 17,362,422 17,612,122 17,452,262
Long-term debt 200,034 34 34 41
Total stockholders' equity 2,459,175 2,520,862 2,532,551 2,552,602
Per Share of Common Stock:
Book value $ 18.00 $18.06 $18.14 $18.29
Tangible book value (non-GAAP) 10.71 10.93 11.01 11.16
Asset Quality Ratios:
Non-accrual loans and leases / total loans and leases 0.11 % 0.10% 0.08% 0.06%
Allowance for loan and lease losses / total loans and leases 1.11 % 1.11% 1.12% 1.13%
Capital Ratios:
Common Equity Tier 1 Capital Ratio 12.19 % 12.73% 12.45% 12.73%
Tier 1 Capital Ratio 12.19 % 12.73% 12.45% 12.73%
Total Capital Ratio 13.23 % 13.77% 13.50% 13.81%
Tier 1 Leverage Ratio 8.61 % 8.71% 8.52% 8.70%
Total stockholders' equity to total assets 12.01 % 12.45% 12.32% 12.53%
Tangible stockholders' equity to tangible assets (non-GAAP) 7.51 % 7.93% 7.86% 8.04%
Non-Financial Data:
Number of branches 61 61 62 62
Number of ATMs 303 310 310 312
Number of Full-Time Equivalent Employees 2,189 2,213 2,220 2,191

Consolidated Statements of Income Table 2
Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts) 2018 2018 2017 2018 2017
Interest income
Loans and lease financing $130,283 $123,551 $114,179 $ 253,834 $223,445
Available-for-sale securities 27,397 28,993 25,059 56,390 51,488
Other 1,339 2,392 781 3,731 2,007
Total interest income 159,019 154,936 140,019 313,955 276,940
Interest expense
Deposits 17,355 15,264 8,760 32,619 16,330
Short-term borrowings and long-term debt 261 — 5 261 11
Total interest expense 17,616 15,264 8,765 32,880 16,341
Net interest income 141,403 139,672 131,254 281,075 260,599
Provision for loan and lease losses 6,020 5,950 4,400 11,970 8,900
Net interest income after provision for loan and lease losses 135,383 133,722 126,854 269,105 251,699
Noninterest income
Service charges on deposit accounts 7,721 7,955 9,238 15,676 18,619
Credit and debit card fees 16,929 15,497 16,019 32,426 32,324
Other service charges and fees 9,633 9,342 8,110 18,975 17,207
Trust and investment services income 7,711 8,231 7,526 15,942 14,864
Bank-owned life insurance 2,395 2,044 2,927 4,439 7,505
Other 5,408 5,631 6,738 11,039 11,098
Total noninterest income 49,797 48,700 50,558 98,497 101,617
Noninterest expense
Salaries and employee benefits 41,636 42,160 40,364 83,796 80,772
Contracted services and professional fees 13,005 12,287 12,388 25,292 22,696
Occupancy 6,908 6,484 5,435 13,392 11,144
Equipment 4,335 4,588 4,527 8,923 8,724
Regulatory assessment and fees 4,225 3,973 3,750 8,198 7,524
Advertising and marketing 1,115 951 1,222 2,066 3,250
Card rewards program 6,359 5,718 5,894 12,077 11,669
Other 14,282 14,426 13,349 28,708 27,141
Total noninterest expense 91,865 90,587 86,929 182,452 172,920
Income before provision for income taxes 93,315 91,835 90,483 185,150 180,396
Provision for income taxes 24,262 23,877 33,588 48,139 66,761
Net income $ 69,053 $67,958 $56,895 $ 137,011 $113,635
Basic earnings per share $ 0.50 $0.49 $0.41 $ 0.99 $0.81
Diluted earnings per share $ 0.50 $0.49 $0.41 $ 0.99 $0.81
Dividends declared per share $ 0.24 $0.24 $0.22 $ 0.48 $0.44
Basic weighted-average outstanding shares 137,907,063 139,600,712 139,546,615 138,749,209 139,546,174
Diluted weighted-average outstanding shares 138,065,879 139,732,100 139,646,117 138,891,955 139,644,557

Consolidated Balance Sheets Table 3
June 30, March 31, December 31, June 30,
(dollars in thousands) 2018
 2018
 2017
 2017
Assets
Cash and due from banks $ 332,102 $283,135 $367,084 $355,752
Interest-bearing deposits in other banks 611,698 409,357 667,560 872,013
Investment securities 4,842,551 5,076,766 5,234,658 5,126,869
Loans held for sale 2,037 397 556 —
Loans and leases 12,637,686 12,464,165 12,277,369 12,062,392
Less: allowance for loan and lease losses 140,601 138,574 137,253 136,883
Net loans and leases 12,497,085 12,325,591 12,140,116 11,925,509
Premises and equipment, net 287,746 288,565 289,215 292,959
Other real estate owned and repossessed personal property 325 — 329 329
Accrued interest receivable 48,528 47,499 47,987 39,739
Bank-owned life insurance 442,449 440,054 438,010 432,726
Goodwill 995,492 995,492 995,492 995,492
Mortgage servicing rights 17,660 18,659 13,196 14,877
Other assets 402,046 357,427 355,258 317,709
Total assets $20,479,719 $20,242,942 $20,549,461 $20,373,974
Liabilities and Stockholders' Equity
Deposits:
Interest-bearing $11,430,455 $11,312,288 $11,485,269 $11,580,664
Noninterest-bearing 5,965,083 6,050,134 6,126,853 5,871,598
Total deposits 17,395,538 17,362,422 17,612,122 17,452,262
Long-term debt 200,034 34 34 41
Retirement benefits payable 135,139 134,684 134,218 134,400
Other liabilities 289,833 224,940 270,536 234,669
Total liabilities 18,020,544 17,722,080 18,016,910 17,821,372
Stockholders' equity
Common stock ($0.01 par value; authorized 300,000,000 shares; issued/outstanding: 139,620,801 / 136,642,060 shares as of June 30, 2018, issued/outstanding: 139,611,795 / 139,601,123 shares as of March 31, 2018, issued/outstanding: 139,599,454 / 139,588,782 shares as of December 31, 2017 and issued and outstanding: 139,546,615 shares as of June 30, 2017) 1,396 1,396 1,396 1,395
Additional paid-in capital 2,492,656 2,490,910 2,488,643 2,488,091
Retained earnings 229,615 193,522 139,177 130,767
Accumulated other comprehensive loss, net (182,410) (164,684) (96,383) (67,651)
Treasury stock (2,978,741 shares as of June 30, 2018, 10,672 as of both March 31, 2018 and December 31, 2017 and nil as of June 30, 2017) (82,082) (282) (282) —
Total stockholders' equity 2,459,175 2,520,862 2,532,551 2,552,602
Total liabilities and stockholders' equity $20,479,719 $20,242,942 $20,549,461 $20,373,974

Average Balances and Interest Rates Table 4
Three Months Ended Three Months Ended Three Months Ended
June 30, 2018 March 31, 2018 June 30, 2017
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 281.2 $ 1.2 1.74 % $616.8 $2.3 1.53%$312.8 $0.8 1.00%
Available-for-Sale Investment Securities 4,961.2 27.4 2.21 5,160.3 29.0 2.28 5,208.8 25.0 1.93
Loans Held for Sale 1.9 — 3.44 0.1 — 2.99 — — —
Loans and Leases (1)
Commercial and industrial 3,177.4 30.5 3.84 3,104.4 27.7 3.62 3,279.2 25.7 3.15
Real estate - commercial 2,883.0 28.9 4.02 2,799.9 26.5 3.83 2,638.3 23.8 3.62
Real estate - construction 620.7 6.2 4.03 621.2 5.7 3.74 509.7 4.3 3.41
Real estate - residential 4,087.2 41.9 4.11 4,009.8 41.1 4.15 3,782.1 38.6 4.09
Consumer 1,624.6 21.7 5.35 1,599.6 21.3 5.41 1,525.8 20.6 5.40
Lease financing 159.7 1.1 2.83 161.8 1.2 3.10 168.1 1.2 2.84
Total Loans and Leases 12,552.6 130.3 4.16 12,296.7 123.5 4.07 11,903.2 114.2 3.85
Other Earning Assets 21.0 0.1 2.21 14.4 0.1 1.68 10.8 — 0.99
Total Earning Assets (2) 17,817.9 159.0 3.58 18,088.3 154.9 3.47 17,435.6 140.0 3.22
Cash and Due from Banks 317.7 318.9 319.4
Other Assets 1,985.9 2,000.5 1,937.2
Total Assets $ 20,121.5 $20,407.7 $19,692.2
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $ 4,573.0 $ 2.4 0.21 % $4,543.1 $1.7 0.15%$4,488.8 $0.7 0.07%
Money Market 2,725.9 2.7 0.40 2,710.9 1.7 0.26 2,618.6 0.8 0.12
Time 4,003.5 12.2 1.22 4,252.3 11.8 1.13 3,887.5 7.2 0.75
Total Interest-Bearing Deposits 11,302.4 17.3 0.62 11,506.3 15.2 0.54 10,994.9 8.7 0.32
Short-Term Borrowings 42.7 0.2 1.85 — — — 1.7 — 0.89
Long-Term Debt (3) 6.6 0.1 3.79 — — — — — —
Total Interest-Bearing Liabilities 11,351.7 17.6 0.62 11,506.3 15.2 0.54 10,996.6 8.7 0.32
Net Interest Income $ 141.4 $139.7 $131.3
Interest Rate Spread 2.96 % 2.93% 2.90%
Net Interest Margin 3.18 % 3.13% 3.02%
Noninterest-Bearing Demand Deposits 5,897.0 5,997.8 5,788.0
Other Liabilities 406.4 403.3 379.2
Stockholders' Equity 2,466.4 2,500.3 2,528.4
Total Liabilities and Stockholders' Equity $ 20,121.5 $20,407.7 $19,692.2

Average Balances and Interest Rates Table 5
Six Months Ended Six Months Ended
June 30, 2018 June 30, 2017
Average Income/ Yield/ Average Income/ Yield/
(dollars in millions) Balance Expense Rate Balance Expense Rate
Earning Assets
Interest-Bearing Deposits in Other Banks $ 448.0 $ 3.6 1.60 % $475.6 $2.0 0.85%
Available-for-Sale Investment Securities 5,060.2 56.4 2.25 5,222.6 51.5 1.99
Loans Held for Sale 1.1 — 3.40 — — —
Loans and Leases (1)
Commercial and industrial 3,141.0 58.2 3.74 3,256.5 50.0 3.10
Real estate - commercial 2,841.7 55.3 3.93 2,560.2 46.0 3.62
Real estate - construction 620.8 12.0 3.89 485.1 8.0 3.34
Real estate - residential 4,048.9 82.9 4.13 3,753.1 76.3 4.10
Consumer 1,612.3 43.0 5.38 1,519.7 40.8 5.42
Lease financing 160.7 2.4 2.97 169.3 2.3 2.80
Total Loans and Leases 12,425.4 253.8 4.12 11,743.9 223.4 3.84
Other Earning Assets 17.7 0.2 2.00 11.0 — 0.88
Total Earning Assets (2) 17,952.4 314.0 3.53 17,453.1 276.9 3.20
Cash and Due from Banks 318.3 322.0
Other Assets 1,993.1 1,955.6
Total Assets $ 20,263.8 $19,730.7
Interest-Bearing Liabilities
Interest-Bearing Deposits
Savings $ 4,558.2 $ 4.1 0.18 % $4,497.5 $1.4 0.06%
Money Market 2,718.4 4.5 0.33 2,556.8 1.3 0.10
Time 4,127.2 24.0 1.17 3,936.4 13.6 0.70
Total Interest-Bearing Deposits 11,403.8 32.6 0.58 10,990.7 16.3 0.30
Short-Term Borrowings 21.5 0.2 1.85 2.8 — 0.65
Long-Term Debt (3) 3.3 0.1 3.81 — — —
Total Interest-Bearing Liabilities 11,428.6 32.9 0.58 10,993.5 16.3 0.30
Net Interest Income $ 281.1 $260.6
Interest Rate Spread 2.95 % 2.90%
Net Interest Margin 3.16 % 3.01%
Noninterest-Bearing Demand Deposits 5,947.1 5,850.6
Other Liabilities 404.8 378.0
Stockholders' Equity 2,483.3 2,508.6
Total Liabilities and Stockholders' Equity $ 20,263.8 $19,730.7

Analysis of Change in Net Interest Income Table 6
Three Months Ended June 30, 2018
Compared to March 31, 2018
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ (1.4) $ 0.4 $ (1.0)
Available-for-Sale Investment Securities (1.1) (0.5) (1.6)
Loans and Leases
Commercial and industrial 0.7 2.1 2.8
Real estate - commercial 0.8 1.6 2.4
Real estate - construction — 0.5 0.5
Real estate - residential 0.8 — 0.8
Consumer 0.3 — 0.3
Lease financing — (0.1) (0.1)
Total Loans and Leases 2.6 4.1 6.7
Total Change in Interest Income 0.1 4.0 4.1
Change in Interest Expense:
Interest-Bearing Deposits
Savings — 0.7 0.7
Money Market — 1.0 1.0
Time (0.7) 1.1 0.4
Total Interest-Bearing Deposits (0.7) 2.8 2.1
Short-Term Borrowings 0.2 — 0.2
Long-Term Debt 0.1 — 0.1
Total Change in Interest Expense (0.4) 2.8 2.4
Change in Net Interest Income $ 0.5 $ 1.2 $ 1.7

Analysis of Change in Net Interest Income Table 7
Three Months Ended June 30, 2018
Compared to June 30, 2017
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $ (0.1) $ 0.6 $ 0.5
Available-for-Sale Investment Securities (1.2) 3.5 2.3
Loans and Leases
Commercial and industrial (0.8) 5.6 4.8
Real estate - commercial 2.3 2.8 5.1
Real estate - construction 1.0 0.9 1.9
Real estate - residential 3.2 0.1 3.3
Consumer 1.3 (0.2) 1.1
Lease financing (0.1) — (0.1)
Total Loans and Leases 6.9 9.2 16.1
Other Earning Assets — 0.1 0.1
Total Change in Interest Income 5.6 13.4 19.0
Change in Interest Expense:
Interest-Bearing Deposits
Savings — 1.6 1.6
Money Market — 2.0 2.0
Time 0.2 4.8 5.0
Total Interest-Bearing Deposits 0.2 8.4 8.6
Short-Term Borrowings 0.2 — 0.2
Long-Term Debt 0.1 — 0.1
Total Change in Interest Expense 0.5 8.4 8.9
Change in Net Interest Income $ 5.1 $ 5.0 $ 10.1

Analysis of Change in Net Interest Income Table 8
Six Months Ended June 30, 2018
Compared to June 30, 2017
(dollars in millions) Volume Rate Total
Change in Interest Income:
Interest-Bearing Deposits in Other Banks $(0.1) $ 1.7 $ 1.6
Available-for-Sale Investment Securities (1.7) 6.6 4.9
Loans and Leases
Commercial and industrial (1.8) 10.0 8.2
Real estate - commercial 5.3 4.0 9.3
Real estate - construction 2.5 1.5 4.0
Real estate - residential 6.1 0.6 6.7
Consumer 2.5 (0.3) 2.2
Lease financing (0.1) 0.1 —
Total Loans and Leases 14.5 15.9 30.4
Other Earning Assets — 0.1 0.1
Total Change in Interest Income 12.7 24.3 37.0
Change in Interest Expense:
Interest-Bearing Deposits
Savings — 2.7 2.7
Money Market 0.1 3.1 3.2
Time 0.7 9.7 10.4
Total Interest-Bearing Deposits 0.8 15.5 16.3
Short-Term Borrowings 0.1 — 0.1
Long-Term Debt 0.1 — 0.1
Total Change in Interest Expense 1.0 15.5 16.5
Change in Net Interest Income $11.7 $ 8.8 $20.5

Loans and Leases Table 9
June 30, March 31, December 31, June 30,
(dollars in thousands) 2018 2018 2017 2017
Commercial and industrial $ 3,116,145 $3,219,210 $3,135,266 $3,331,092
Real estate:
Commercial 2,837,520 2,738,557 2,667,597 2,545,479
Construction 654,084 594,266 632,911 555,794
Residential 4,236,083 4,156,003 4,090,053 3,921,881
Total real estate 7,727,687 7,488,826 7,390,561 7,023,154
Consumer 1,632,088 1,595,989 1,586,476 1,527,470
Lease financing 161,766 160,140 165,066 180,676
Total loans and leases $ 12,637,686 $12,464,165 $12,277,369 $12,062,392

Deposits Table 10
June 30, March 31, December 31, June 30,
(dollars in thousands) 2018 2018 2017 2017
Demand $ 5,965,083 $ 6,050,134 $ 6,126,853 $ 5,871,598
Savings 4,772,922 4,614,668 4,509,419 4,568,600
Money Market 2,768,190 2,631,894 2,801,968 2,944,005
Time 3,889,343 4,065,726 4,173,882 4,068,059
Total Deposits $ 17,395,538 $ 17,362,422 $ 17,612,122 $ 17,452,262

Non-Performing Assets and Accruing Loans and Leases Past Due 90 Days or More Table 11
June 30, March 31, December 31, June 30,
(dollars in thousands) 2018 2018 2017 2017
Non-Performing Assets
Non-Accrual Loans and Leases
Commercial Loans:
Commercial and industrial $ 1,821 $1,888 $2,932 $2,155
Real estate - commercial 2,844 2,885 1,786 —
Real estate - construction 2,238 2,001 — —
Total Commercial Loans 6,903 6,774 4,718 2,155
Residential 6,541 5,349 5,107 5,569
Total Non-Accrual Loans and Leases 13,444 12,123 9,825 7,724
Other Real Estate Owned 325 — 329 329
Total Non-Performing Assets $ 13,769 $12,123 $10,154 $8,053
Accruing Loans and Leases Past Due 90 Days or More
Commercial Loans:
Commercial and industrial $ 163 $83 $220 $1,275
Real estate - commercial — — 1,400 350
Real estate - construction — 343 — —
Total Commercial Loans 163 426 1,620 1,625
Residential 1,581 1,469 1,360 1,543
Consumer 1,451 1,744 1,394 1,873
Total Accruing Loans and Leases Past Due 90 Days or More $ 3,195 $3,639 $4,374 $5,041
Restructured Loans on Accrual Status and Not Past Due 90 Days or More 32,277 33,429 34,130 38,886
Total Loans and Leases $ 12,637,686 $12,464,165 $12,277,369 $12,062,392

Allowance for Loan and Lease Losses Table 12
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(dollars in thousands) 2018
 2018
 2017
 2018
 2017
Balance at Beginning of Period $ 138,574 $137,253 $135,847 $ 137,253 $135,494
Loans and Leases Charged-Off
Commercial Loans:
Commercial and industrial — (475) (75) (475) (930)
Lease financing — — (146) — (146)
Total Commercial Loans — (475) (221) (475) (1,076)
Residential (34) — — (34) (22)
Consumer (6,290) (6,625) (5,251) (12,915) (10,823)
Total Loans and Leases Charged-Off (6,324) (7,100) (5,472) (13,424) (11,921)
Recoveries on Loans and Leases Previously Charged-Off
Commercial Loans:
Commercial and industrial 39 64 129 103 243
Real estate - commercial 32 122 55 154 132
Total Commercial Loans 71 186 184 257 375
Residential 60 182 150 242 471
Consumer 2,200 2,103 1,774 4,303 3,564
Total Recoveries on Loans and Leases Previously Charged-Off 2,331 2,471 2,108 4,802 4,410
Net Loans and Leases Charged-Off (3,993) (4,629) (3,364) (8,622) (7,511)
Provision for Loan and Lease Losses 6,020 5,950 4,400 11,970 8,900
Balance at End of Period $ 140,601 $138,574 $136,883 $ 140,601 $136,883
Average Loans and Leases Outstanding $ 12,552,610 $12,296,678 $11,903,255 $ 12,425,351 $11,743,835
Ratio of Net Loans and Leases Charged-Off to Average Loans and Leases Outstanding 0.13 % 0.15% 0.11% 0.14 % 0.13%
Ratio of Allowance for Loan and Lease Losses to Loans and Leases Outstanding 1.11 % 1.11% 1.13% 1.11 % 1.13%

GAAP to Non-GAAP Reconciliation Table 13
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts) 2018 2018 2017 2018 2017
Income Statement Data:
Net income $ 69,053 $67,958 $56,895 $ 137,011 $113,635
Average total stockholders' equity $2,466,392 $2,500,299 $2,528,388 $2,483,252 $2,508,564
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible stockholders' equity $1,470,900 $1,504,807 $1,532,896 $1,487,760 $1,513,072
Average total assets $20,121,504 $20,407,718 $19,692,222 $20,263,820 $19,730,651
Less: average goodwill 995,492 995,492 995,492 995,492 995,492
Average tangible assets $19,126,012 $19,412,226 $18,696,730 $19,268,328 $18,735,159
Return on average total stockholders' equity(1) 11.23 % 11.02% 9.03% 11.13 % 9.13%
Return on average tangible stockholders' equity (non-GAAP)(1) 18.83 % 18.32% 14.89% 18.57 % 15.14%
Return on average total assets(1) 1.38 % 1.35% 1.16% 1.36 % 1.16%
Return on average tangible assets (non-GAAP)(1) 1.45 % 1.42% 1.22% 1.43 % 1.22%
Average stockholders' equity to average assets 12.26 % 12.25% 12.84% 12.25 % 12.71%
Tangible average stockholders' equity to tangible average assets (non-GAAP) 7.69 % 7.75% 8.20% 7.72 % 8.08%
As of As of As of As of
June 30, March 31, December 31, June 30,
2018 2018 2017 2017
Balance Sheet Data:
Total stockholders' equity $ 2,459,175 $2,520,862 $2,532,551 $2,552,602
Less: goodwill 995,492 995,492 995,492 995,492
Tangible stockholders' equity $ 1,463,683 $1,525,370 $1,537,059 $1,557,110
Total assets $20,479,719 $20,242,942 $20,549,461 $20,373,974
Less: goodwill 995,492 995,492 995,492 995,492
Tangible assets $19,484,227 $19,247,450 $19,553,969 $19,378,482
Shares outstanding 136,642,060 139,601,123 139,588,782 139,546,615
Total stockholders' equity to total assets 12.01 % 12.45% 12.32% 12.53%
Tangible stockholders' equity to tangible assets (non-GAAP) 7.51 % 7.93% 7.86% 8.04%
Book value per share $ 18.00 $18.06 $18.14 $18.29
Tangible book value per share (non-GAAP) $ 10.71 $10.93 $11.01 $11.16

GAAP to Non-GAAP Reconciliation Table 14
For the Three Months Ended For the Six Months Ended
June 30, March 31, June 30, June 30,
(dollars in thousands, except per share amounts) 2018
 2018
 2017
 2018
 2017
Net interest income $ 141,403 $139,672 $131,254 $ 281,075 $260,599
Core net interest income (non-GAAP) $ 141,403 $139,672 $131,254 $ 281,075 $260,599
Noninterest income $ 49,797 $48,700 $50,558 $ 98,497 $101,617
Core noninterest income (non-GAAP) $ 49,797 $48,700 $50,558 $ 98,497 $101,617
Noninterest expense $ 91,865 $90,587 $86,929 $ 182,452 $172,920
One-time items(1) (914) (407) (457) (1,321) (841)
Core noninterest expense (non-GAAP) $ 90,951 $90,180 $86,472 $ 181,131 $172,079
Net income $ 69,053 $67,958 $56,895 $ 137,011 $113,635
One-time items(1) 914 407 457 1,321 841
Tax adjustments(2) (247) (106) (171) (353) (313)
Total core adjustments 667 301 286 968 528
Core net income (non-GAAP) $ 69,720 $68,259 $57,181 $ 137,979 $114,163
Core basic earnings per share (non-GAAP) $ 0.51 $0.49 $0.41 $ 0.99 $0.82
Core diluted earnings per share (non-GAAP) $ 0.50 $0.49 $0.41 $ 0.99 $0.82
Basic earnings per share $ 0.50 $0.49 $0.41 $ 0.99 $0.81
Diluted earnings per share $ 0.50 $0.49 $0.41 $ 0.99 $0.81

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